A health savings account is a really cool vehicle to save money in, provided you don’t have large medical costs. You need to have a high deductible health insurance plan. What that means for 2012 is your maximum out of pocket expenses must be at least $6,050 for a single plan or $12,100 for a family plan. If your employer offers an HSA or your insurance company offers one you should consider it. The way it works is you pay the monthly insurance premium and then you place money into the health savings account to pay for your medical bills. In 2012 you can contribute $3,100 for a single plan or $6,250 for a family plan. Then when you visit the doctor you pay for the visit out of the health savings plan. If you don’t need to visit the doctor the money stays in the account and you can contribute again the next year. If you don’t use it up by the time you are eligible for Medicare, the health savings account turns into an IRA and you can pull money out like you would for an IRA and no longer only use it for medical expenses.
The IRS recently released the contribution amounts for 2013 and instead of only increasing by $50 like they have in past years they have increased the contribution for a single to $3,250 (a $150 increase) and for a family plan it is increased to $6,450 (a $200 increase). Of course the maximum out of pocket also increased. For a single plan it will be $6,250 and for a family it will be $12,500.